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Addressing the Challenges and Opportunities of Success in Asia

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Publication

Casino Gaming International

Written By

Frank J. Fahrenkopf, Jr.

In a relatively short period of time, the tremendous growth in Asia’s commercial casino gaming industry has established it as a major presence in the international entertainment and hospitality marketplace.

The legitimacy of casino gaming as a “player” in the Asian economy is evidenced by the boom in the commercial casino gaming business in – among other places – Macau, which is host to 29 casinos, up from a mere half dozen or so in 2003. The Venetian, Wynn, MGM MIRAGE, Galaxay, SJM and Melco PBL are represented in this group. By 2010, Macau is projected to be home to 35 luxury casinos and 38,000 hotel rooms. Next year, in fact, 21 hotel projects are expected to be completed, bringing almost 33,000 rooms to this market. Macau entertained seven million visitors in 1997. In 2006, 22 million people made their way here, and predictions are that in the not-too-distant future, 50 million will be visiting annually.

Then there is Singapore, where a pair of world-class casino entertainment projects are under construction, among them the $3.6 billion dollar Marina Bay Sands being developed by Sheldon Adelson’s Las Vegas-based company, Las Vegas Sands. This project will include three 50-story hotel towers, two 2,000-seat theaters, a five-story convention center, a metal-and-glass arts-and-science center, and a 1,000-foot public sky garden. Resorts World at Sentosa in Singapore is another mega-casino gaming complex currently under construction. With a $6 billion price tag, it will include 1,800 rooms spread across six separate theme hotels with full conference and business meeting facilities, as well as a destination spa, and Southeast Asia’s first and only Universal Studios theme park.

Malaysia is already in the game as home to the Genting Highlands Casino and Resort, often called the “City of Entertainment.” Its 6,118 rooms make the resort the largest hotel in the world, surpassing the MGM Grand in Las Vegas.

These developments are spectacular, and they point to a bright future for the region. We have seen in the U.S. how the commercial gaming entertainment industry has proven to be a solid community partner, and the growth of the Asian market signals similar levels of commitment. But this degree of growth and success does not come without challenges and hurdles that confront continued progress.

Macau, where, from one perspective, times have never been better for the city and its citizens, is facing such challenges. On the one hand, the growth of the commercial casino gaming industry has brought what economists define as a “full employment economy;” average salaries are up an estimated 40 percent; GDP grew about 30 percent last year; and the small business community is growing exponentially.

Then there is the other perspective. A labor shortage looms – and in some areas has already surfaced – as estimates show that upwards of 100,000 people will be needed to service the tourist trade that will be pouring into Macau. The indigenous population cannot fill this need. Related to this, various elements of sophistication related to employment, such as the development of staff loyalty and leadership skills need attention in order to secure a solid industry. The local infrastructure is also being rigorously tested. The transportation element is severely strained, and the demand for electricity and water could be overwhelming.

Indeed, growth and prosperity are difficult to attain, and once attained, are a challenge to maintain. One of the most successful ways to review and address the prospects and challenges that contribute to the ingredients of the economic stew that is the commercial casino gaming industry in Macau and the entire Asian region is to facilitate the congregation of industry, government and academic leaders in the field. So was born Global Gaming Expo (G2E) Asia created by the American Gaming Association (AGA) and Reed Exhibitions – co-sponsors of the G2E portfolio of events.

As many readers are aware, the AGA and Reed have partnered and staged the flagship G2E event held in Las Vegas for the past seven years. Since its inception, this event has been considered the premier business and networking forum for our industry, providing the type of product review and idea-sharing opportunities necessary to promote the adoption and refinement of the latest technologies, newest innovations and biggest ideas in gaming. This flagship G2E production has accomplished that, and although it has consistently attracted hundreds of attendees from Asia, we recognized the call for the same caliber of trade show and conference event in Asia to specifically address the needs and interests of the industry’s fastest-growing marketplace.

The inaugural G2E Asia was staged last year in Macau. Attendance and trade show space were limited by accommodations at the time; nevertheless, an overflow crowd of 3,000 gaming professionals attended, representing more than 50 nations. The trade show space, which showcased 80 of the world’s leading gaming equipment manufacturers and suppliers, sold out. This tremendous level of success conclusively demonstrated the need and desire for a G2E presence in Asia.

G2E Asia 2008 will be held June 4-5 at the Cotai Strip Convention and Exhibition Center in the Venetian Macao. The trade show element of this year’s event already boasts more than 125 exhibitors who have claimed ground on the 85,000-plus square-foot exhibition floor, which is three times the size of last year’s space.

We learned a great deal from our inaugural event about the types of exhibits that are of interest in the Asian marketplace and how much and what kind of educational content should be featured. After all, the hallmark of the G2E brand is that we are designed “by the industry and for the industry,” and feedback from attendees is the primary driving force that determines how we develop these events.

Importantly, we enhanced our G2E Asia program advisory board to include more individuals from Asia who have made it possible to attract top-notch speakers, and helped us develop sessions that truly speak to the needs of the market. Next, we worked very hard to incorporate leaders from all the different types of organizations doing business in Asia, including Asian companies as well as U.S. companies and others coming into the market.

The result is that a number of valuable new features will be introduced at G2E Asia 2008, including the debut of specialized exhibit pavilions on the show floor and an extra day of conference content.

Two of these new pavilions – Security & Surveillance and iGaming Business – will demonstrate how technological innovations are changing the way casino companies approach the business of gaming both operationally and in the back of the house. These pavilions will help gaming professionals stay up-to-date on the latest trends in these important areas.

Internet gambling is an interesting case of the divergent paths that can be taken on gaming issues in different markets. As many readers know, the U.S. Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006, requiring banks and credit card companies to block electronic transactions to Internet gambling businesses and prohibiting the use of checks to fund Internet gambling accounts. Regulations have been proposed that would require financial institutions and automated payment system companies to implement policies and procedures designed to prevent payments being made to offshore illegal Internet gambling businesses.

UIGEA has been challenged twice in the U.S. because of questions regarding its constitutionality, and the financial sector has strongly opposed the proposed regulations that would govern the law due to the excessive oversight burden they place on banks and other financial institutions. Several pieces of legislation have been introduced in the U.S. Congress to address Internet gambling. The AGA supports the Internet Gambling Study Act, which calls for a comprehensive study of Internet gambling to be conducted by the National Academy of Sciences to help determine the best way for the U.S. to deal with the issue.

Despite this position and the turmoil in the U.S. on this topic, Internet gambling is a growing sector of the gaming business in Asia – and elsewhere – just as it is being circumscribed in the United States. The fact that Internet gambling continues to garner such interest in the industry generally – and in the Asian gaming marketplace in particular – called for its inclusion in our program.

In addition to in-depth analysis of the Internet gambling arena, G2E Asia’s three full days of expert-led professional development sessions will cover a variety of key industry topics. The more than 50 sessions on subjects such as Asian Markets, Casino Design, Corporate Social Responsibility, the Gaming Floor, Macau, Marketing, and Security & Surveillance have been designed to help industry, government and community leaders navigate the very challenges currently facing Macau and the region.

For example, with Thailand’s new prime minister having recently announced a desire to open his country to commercial casino gaming, and with Taiwan, Korea and Japan debating the prospects of getting into the game, what threats and benefits are posed to existing gaming jurisdictions by these expansion possibilities? Questions about saturation have been hanging over the expansion of gaming in the United States and other regions of the world. This subject will be considered during the Asian Markets track at G2E Asia within the various Regional Overview sessions offering panels of experts that include economists and developers.

Gaming expansion also brings with it challenges related to regulation that affect the development, marketing and operation of the industry. We in the U.S. commercial casino gaming sector have found that working with government to identify needs that must be addressed, and then cooperating to find solutions has worked well. By combining the expertise of the private sector with the oversight mechanisms of government, we have discovered a comfortable nexus for cooperation.

With regard to regulation and the integrity of gaming operations, we have worked closely with government entities to make certain there is a high level of transparency so the public recognizes that fair play pervades. Integrity and transparency are the hallmarks of modern U.S. commercial casino gaming operations, which means governments, employees and customers depend on gaming companies to provide a reliable product. Challenges do exist, however, when it comes to regulatory issues such as licensing and compliance, multi-jurisdictional issues, information sharing, gaming standards and more, particularly in growing markets, and markets with a significant international presence. Here, again, many of these issues will be addressed during the Asian Markets track of G2E Asia, including those sessions featuring regulators from the region who will discuss philosophies that drive the development and implementation of regulations in the Asian market generally, and in Macau specifically.

Another critical issue that should be considered by everyone in our industry – and is, in fact, a central track in the G2E Asia 2008 conference program – is corporate social responsibility. It is a key component of the global sustainability of our industry, and its importance cannot be overstated, especially in relation to problem gambling.

As we know, research has confirmed that there is a small percentage of people who simply cannot gamble responsibly. As an industry committed to creating economic progress, tax revenues and good jobs, we must also be prepared to mitigate any possible harm done to consumers. All of us in the industry recognize it is important to educate the public about how to gamble responsibly, and to gain a better understanding about disordered gambling and how to prevent and treat the malady.

The casino gaming industry in the United States has donated millions of dollars through the National Center for Responsible Gaming (NCRG) to fund peer-reviewed research on disordered and youth gambling. We have long held that effective responsible gaming programs must be rooted in sound science in order to succeed, and there is much research and best practices to guide efforts in this arena. As part of the Corporate Social Responsibility track at G2E Asia, the NCRG is sponsoring several sessions aimed at exploring this important issue. G2E Asia will examine the steps to creating an effective, research-based responsible gaming program that will address the concerns of regulators, serve employees and help protect vulnerable populations. Leading international researchers will provide a primer on the latest research findings most relevant to industry professionals and regulators. In addition, the conference will explore how to create an effective responsible gaming framework. We also will examine how responsible gaming programs can best be adapted specifically for the Asian community.

As science identifies the distribution and determinants of gambling-related problems among the population and its high-risk segments, public health, gambling industry, public policy, and even anti-gambling interests should be encouraged to work together to limit gambling-related harms, and these sessions should provide a useful primer on how that might be accomplished. Much progress on this topic already has been made throughout Asia, and the conference aims to provide a next step in the necessary and ongoing dialogue.

Beyond corporate social responsibility, one of the most interesting discussions should take place around the subject of marketing. Conference sessions will explore how to determine the needs, wants and expectations of the various sub-markets in Asia, and how to cater to them. Another session will look at database marketing, a very popular form of marketing in the U.S., but a tool that still has to be reviewed to determine the validity and form of its use in Asia. Advertising strategies will also be discussed in light of the various rules and regulations in the region, some of which ban the mention of gambling altogether.

With its recognition of the unique circumstances surrounding the Asian gaming environment, G2E Asia offers industry leaders in the region an impetus to come together and begin to tackle all of these issues on a broad scale.

And to prepare a new generation of leaders, this year marks the introduction of the G2E Asia Gaming Management Certificate program, a one-day training workshop of sessions specifically designed to address the subjects and trends that are most crucial to success in today’s competitive gaming marketplace.

The legitimacy of the commercial casino gaming industry – the value of it as an economic force and social mainstay – is undeniable. It is an international business that is bringing entertainment, economic prosperity and goodwill to millions, with the prospects for growth burgeoning in the highly successful Asian market

Whether a gaming market is mature or just beginning to develop, the challenges and opportunities we all face are strikingly similar, and there is much to be learned from one another. G2E Asia will provide a forum for shaping the industry in Asia and a way to communicate ideas, vision and experiences to move the entire region toward a more successful future. The upcoming G2E Asia brings the global gaming community together to learn from our past and plan for our future. This continued collaboration will be vital for the future of the region and the entire global gaming entertainment industry.